East-west jet fuel spread widens on firm European crack
Quantum Commodity Intelligence – The spread between the price of jet fuel in Asia versus the price of jet fuel in Europe widened on Wednesday morning compared to the same time a day earlier as a rise in European jet fuel refining margins was not matched in Asia.
The so-called east-west spread between July swaps for FOB Singapore cargoes versus CIF NWE quotes widened to -$13.80/b by 1630 Singapore time, down $1/b from -$12.80 at the same time on Tuesday.
The Q4 east-west spread also widened $1/b - from $12.31/b to $13.33/b.
Flight data shows a recovery in prompt European demand, albeit more sluggish than previously thought with higher refinery runs in Europe matched by higher demand, leaving July paper cracks at $4.46/b in Europe, up $0.20/b on the same time a day earlier.
Meanwhile, Asian demand is sluggish, and the prospect of fresh travel curbs in South Korea, Japan and Vietnam will do little to inject bullish momentum in FOB Singapore prices.
Paper cracks for July were up $0.07/b FOB Singapore to $2.70/b, although refining margins remain stuck in a rut and have been in a downward trend since the middle of May.
Spot deals remain thin with one reported yesterday at a steep $0.40/b cash differential to the swaps market, reflecting a sign of weakness.
Travel curbs remain in place for Asia and are likely to increase.
On Tuesday Vietnam reportedly banned dozens of flight, while South Korea and Japan are set to impose fresh restrictions due to concerns over persistent community transmission of Covid-19.
